Weak sales of the BlackBerry Z10 have been blamed for the company’s shares tumbling near 30% last week.
At the close of the market on Friday, BlackBerry shares were 27.76% lower, having lost $4.02, to $10.46, giving the company a market capitalisation of $5.5 billion. The shares started falling last July and its 52-week low is $6.22, according to Nasdaq information. Its 52-week high is $18.32.
The company has been losing traction in the smartphone market and, according to the International Data Corporation, BlackBerry’s market share for the first quarter of 2013 slipped to 2.9%, from 6.4% the previous quarter.
According to Reuters, BlackBerry said it had shipped 6.8 million smartphones in the first quarter of 2013, which included about 2.7 million BlackBerry 10 devices. Market expectations for the Z10 and Q10 devices were set at three million shipments.
Blaming it on the 10?
The BlackBerry Z10, which was released to the South African market in February, is the Canadian company’s first attempt at a full touchscreen premium device. Reports already emerged in April indicating sales for the Z10 had been weak and some consumers had even returned the device after purchasing it.
BlackBerry CEO Thorsten Heins challenged a report by Boston-based research firm Detwiler Fenton that claimed customer returns of the Z10 were actually outnumbering sales. Heins said data collected from US retailers and partners indicated customers were satisfied with their devices, and branded Detwiler Fenton’s findings as “absolutely false”.
Arthur Goldstuck, MD of World Wide Worx, says while local sales figures for the Z10 haven’t been finalised, he believes it has followed the international trend to some extent. “A lot of people at the high-end market are moving over from BlackBerry to Samsung’s S4 and the Sony Xperia Z.”
Goldstuck says the biggest problem with BlackBerry it that its devices are not seen to be at the same featurs level as its competitors from Samsung, Sony and HTC, but they fall into the same price range. “BlackBerry needs to compete on price and give people a reason to buy its devices and they are simply not doing that.”
He says the share drop isn’t directly related to the South African market. “BlackBerry’s big new entry is the Q5 and that is meant to be the BlackBerry 10 version of the Curve range. But again pricing is substantially higher.”
Due to the price, the market is unlikely to migrate to the Q5, he notes. The Q5 is currently available from Vodacom on prepaid for R4 999.
BlackBerry South Africa also responded to the share drop, with the company’s MD for South and Southern Africa, Alexandra Zagury, saying BlackBerry doesn’t break down sales figures per region.
“However, I can confirm that we have seen strong initial demand and interest from South African consumers in the BlackBerry Z10, which is already one of the top five leading smartphones in SA, according to the GfK Retail and Technology report for April 2013,” he adds.
On top of this, Cell C executive head of communications Karin Fourie confirmed the BlackBerry Z10 has been selling well. “However, some of the entry-level devices on the BlackBerry 7 platform, in particular the 9320, continue to be extremely popular with our customers.”
Swim or sell out
Goldstuck says it comes as no surprise that BlackBerry’s stock was hammered as it came in below expectations. “Right now they have to meet expectations which have been set quite low already. They can’t meet their low expectations
When looking at BlackBerry’s cash in the bank, set at $3.1 billion, Goldstuck says it’s still a healthy company. “BlackBerry still has the luxury of experimenting a little more with their devices and their pricing.”
Goldstuck says it’s too soon to consider BlackBerry a write-off in the smartphone market. “In fact, if their shares tumble even further, it would probably be a good buying opportunity.”
He says one of two things is likely to happen. “There is a high chance that BlackBerry will come up with something compelling as their technology has advanced dramatically. But also looking at these share prices, they become a very attractive acquisition target.”